Accountants’ body wants VAT at 12%

IMF speaks on budget hopes

Post was last updated: June 12, 2020

GWENHAMO

The International Monetary Fund (IMF) has said it expects the Treasury to allocate sufficient funds towards fighting the Covid-19 pandemic without foregoing investment in productive sectors of the economy in the 2020/2021 budget.

This comes as Minister of Finance, Economic Planning and Development, Joseph Mwanamvekha, is today expected to present the financial plan to Parliament.

The finance minister is on record saying the budget will focus on mitigating impact of Covid-19 and accelerating economic recovery.

In an interview, IMF resident representative, Farayi Gwenhamo, said it will be critical for the authorities to also consider reducing fiscal deficit and manage public debt.

“Discussions with the authorities on the budget are ongoing. However it will be important to ensure sufficient funding for the adequate Covid-19 response, preserving productive spending and investment while ensuring the fiscal deficit remains low and public debt sustainable,” Gwenhamo said.

Recently, the IMF approved a $91 million (about K67.3 billion) loan to Malawi for Covid-19 trade balance woes under the Rapid Credit Facility (RCF).

The 2019/2020 budget faced numerous challenges following prolonged election standoff coupled with effects of the Covid-19 pandemic which drastically reduced economic activity in the country.

Economists expect the budget to be higher than last year’s amid prevailing challenges facing the economy.

Implementation of the budget would also face numerous challenges as a cloud of uncertainty still hovour over the country’s economic growth prospects.

The 2019/20 budget was initially pegged at K1.74 trillion but was adjusted upwards to K1.84 trillion during the Mid-Year Budget Review in February.

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